According to our compensation data, 91% of teams missed sales quota last year.

Market conditions were the leading reason, along with misaligned sales activity and unrealistic quotas or sales goals.

All of which relate to the sales quota.

The pressure to hit these targets can be immense, leading to demotivation, burnout, and ultimately, a revolving door of sales reps paired with missed revenue goals. 

That’s where we come in, with years of experience partnering with organizations to build fair, realistic, and aligned compensation plans and quotas.

In this blog, we’ll explain a step-by-step process for setting quotas. This will ensure that your quotas are both challenging and attainable, keeping your team motivated and on track for success. 

Best Practices Before Setting Your Sales Quota

As you prepare to set your sales quotas, leverage these proven techniques to improve your success.

Gather Historical Data and Market Insights:

• Analyze past sales performance data to understand trends and baselines.
• Research current market conditions and competitor activity.

Set SMART Goals:

• Specific: Clearly define what the quota represents (e.g., revenue, units sold).
• Measurable: Establish quantifiable metrics to track progress.
• Attainable: Set ambitious yet achievable targets based on data and market insights.
• Relevant: Align quotas with overall sales goals and company strategy.
• Time-Bound: Define a clear timeframe for achieving the quota (e.g., quarterly, annually).

Consider Team Input and Collaboration:

• Involve your sales team in quota discussions to gather feedback and foster ownership.
• Facilitate discussions about individual and team goals to ensure alignment.

Account for Territory and Product Variations:

• Adjust quotas for different territories based on market size, customer base, and sales complexity.
• If applicable, tailor quotas to account for varying product lines with different price points and sales cycles.

Factor in External Influences:

• Be prepared to adjust quotas based on unforeseen market shifts or economic changes.
• Consider seasonal trends that might impact sales performance within specific timeframes.

Communicate Clearly and Transparently:

• Clearly explain the rationale behind the quotas to your sales team.
• Regularly communicate progress and provide ongoing support throughout the sales cycle.

Review and Revise as Needed:

• Monitor performance regularly and be ready to adjust if necessary.
• Conduct periodic reviews to assess the effectiveness of the quota and fine-tune for future periods.

Steps to Set a Sales Quota

Now you’re ready to set your sales quota.

There are various types of revenue and non-revenue quotas, with revenue quotas being the most common. Follow these steps to set your revenue-based sales quotas.

1. Calculate revenue targets based on OTE

Sales reps must generate sufficient revenue to pay for themselves including such costs as base salary, benefits, overhead, and commission. The revenue target should equal some multiplier of the salesperson’s on-target earnings (OTE).

We typically recommend a quota multiplier between 3x and 8x of your team’s OTE. However, the multiplier varies based on industry, experience, location, and company size.

For example, if your salesperson is a mid-level SaaS rep who has a $120K OTE. Using a commonly used 5x OTE, would result in an annual quota of $600K.

Next, you must decide whether your quota is monthly, quarterly, or annual.

2. Determine quota period

When setting quota frequency, consider the sales cycle length, average sales price, and company stage.

Our research revealed that companies commonly rely on average sales price and sales cycle length to determine quota periods with quarterly cycles being most frequently selected.

Factoring in the company stage typically leads to longer quota periods for older and established companies, and shorter quota cycles, such as monthly, for startups to create a sense of urgency with their reps.

Using the example of the rep with a $120K OTE, a $600K annualized quota translates to a $50K monthly or $150K quarterly quota.

3. Confirm the quota is achievable

Setting a quota is not an exact science, therefore it’s typically necessary to assess for effectiveness and adjust accordingly.

Sales quotas need to be challenging but attainable. If they are too high, your sales team may become demotivated or simply stop trying to achieve it, and they may choose to leave.

We’re not saying that 100% of your team members should hit quota, a good standard is 80% of reps hitting it each period. This usually results in the overall team hitting quota as top performers make up for laggards.

How do you determine how achievable your quotas are? For instance, take the $50K monthly quota from our earlier example. If your salespeople average $25K per month in sales, the quota or OTE may be too high. However, if your team members average $75K per month in sales, the quota may be too low.

Bear in mind that companies experiencing high growth or low growth are more likely to experience these ‘overpayment’ or ‘underpayment situations due to an ever-changing marketplace, according to Alexander Group. This is especially true when the company is striving to encourage additional growth by setting aggressive quotas and may lead to fewer reps hitting quota.

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What To Do If Your Quota Is Wrong

Unachievable or “wrong” quotas stem from various factors such as data misinterpretation, market shifts, lack of team input, low team morale, and high turnover. Once you recognize that you have the wrong quotas, you can take measures to adjust them.

Take action by:

• Reviewing sales data to identify trends and pinpoint areas of deviation. Make sure you consider external factors in addition to the obvious internal factors. For instance, market volatility and competitive changes must be considered in addition to individual and overall team performance.  

• Holding open communication between sales reps and leadership through scheduled meetings. Discuss concerns, present data-driven evidence of quota inaccuracies in 1-to-1 and team meetings, and gather feedback about how reps believe the plan can be improved. Then, incorporate that feedback when adjusting your quota structure.

• Evaluating other solutions outside of adjusting quota. Sometimes, the solution lies outside the quota. Provide the team with additional resources, coaching resources, or revised timelines. For instance, individual team members may need additional coaching to develop their closing skills or improve their discovery calls to meet or exceed their quotas.

Resources to Help

Setting effective sales quotas is essential to achieving business objectives. Leverage our best practices to improve your success as you prepare to set a sales quota. This includes proactively gathering data, insights, and team input, as well as accounting for territory and product variations and external influences.

Then, follow our simple three-step process for setting a sales quota. If your quota is incorrect, identify the root causes and address them accordingly.

These additional tools will help with your comp plan and quota designs:

• Compensation Plan Templates 
• Quota:OTE Calculator
• Sales Funnel Calculator

Schedule time with a team member, or check out QuotaPath with a free trial to run and manage sales compensation more efficiently. 

Spiff program management refers to the design, strategy, and execution of SPIFFs (short for sales performance incentive fund formula) to maximize sales revenue during a set period. It’s a common tactic adopted by revenue teams with powerful outcomes.

Well-designed spiff programs can boost sales by up to 20%. 

Remember that fast-start spiff that rewarded your sales team with a nice bonus for closing deals the first week of the quarter to distribute revenue? 

It felt good, right? 

While incentive designs like spiffs hold immense potential, poorly managed programs can lead to confusion, administrative headaches, and loss of appeal with your reps. In some cases, spiffs can hinder sales performance. 

Effective program management and optimization are the keys to unlocking the power of spiffs. 

This blog highlights best practices for implementing successful spiff programs, including clear communication, leveraging technology, and celebrating achievements.  

Do SPIFs work?

Nearly every sales organization runs sales performance incentive funds (SPIFFs) throughout the year. But do they work? Learn when and how to use them effectively.

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Best Practices for Spiff Program Management

When designed strategically, we’ve established that spiff programs can be powerful tools for employee motivation and driving accurate results. But simply throwing out a spiff and hoping for the best isn’t a recipe for success. 

The true magic lies in effective program management.

This section will delve into the key best practices for ensuring your spiff programs are well-organized and transparent, ultimately achieving the desired impact on your sales team and bottom line. 

Follow these best practices to solidify your sales rewards programs.

 Spiff Ideation

First, you’ll want to carefully craft out what the spiff is and what you hope it accomplishes.

• Align Spiffs with Business Objectives: Don’t create spiffs in a vacuum. Ensure they directly tie into your overall sales goals and strategic initiatives. Is there a product line that needs a push?  Are you trying to close deals with a specific customer segment?  Design your spiff to incentivize behaviors that directly contribute to achieving these goals.
• Simplicity is Key:  Spiffs shouldn’t be complex puzzles for your sales team to solve.  Keep the program guidelines clear, concise, and easy to understand. This includes clearly defining the target actions, outlining the reward structure, and setting achievable targets. A confused salesperson is a disengaged salesperson.
• Offer Compelling Rewards: The reward is what motivates the behavior. While financial incentives are common, consider other options as well. Think about what would truly excite your sales team. This could be exclusive experiences, additional paid time off, recognition on a leaderboard, or early access to new products.

Communicating Program Details to the Team

The next thing to keep in mind is communication.

Your sales team needs to understand every aspect of the program, from its goals and objectives to the actions that will earn them rewards. 

Here’s how to ensure your communication is transparent and leaves no room for confusion:

• Clearly define program goals and objectives: Right from the start, explain the “why” behind the spiff program. What are you hoping to achieve with this initiative? Is it to increase new product line sales, incentivize upselling, or shorten sales cycles? By understanding the program’s purpose, your team will be better equipped to align their efforts and maximize their earning potential.
• Outline eligible products, services, or activities: Don’t leave your sales team guessing what qualifies for a spiff reward. Clearly outline the specific products, services, or activities that trigger a payout. This could be closing deals above a certain value threshold, selling specific product bundles, or onboarding new customers within a set timeframe.
• Specify reward structures and timelines: Reward transparency is key to motivating participation. Detail the exact payout structure for achieving the defined goals. Will it be a flat fee, a commission percentage, or a tiered reward system? Additionally, communicate the timeframe for earning and receiving rewards. Knowing when they can expect to see the fruits of their labor keeps your team engaged and focused.
• Communicate program rules and expectations: Lay out any specific rules or limitations associated with the program. Are there any exclusions or blackout periods? Is there a minimum participation requirement? Review these details to avoid misunderstandings and ensure everyone is on the same page.
• Use multiple communication channels: Don’t rely on a single announcement to convey the message. Utilize a variety of channels to reach your sales team. This could include sending a comprehensive email outlining the program details, presenting the information during a sales meeting, and posting the guidelines on your company intranet for easy reference.

 Leveraging Technology for Efficiency

Third, remember that technology is your friend and can make tracking, communicating, and executing spiffs easier.

Here’s how QuotaPath empowers you to leverage technology for seamless spiff program management:

By leveraging QuotaPath’s powerful features, you can streamline spiff program management, save valuable time and resources, and drive higher sales performance through a motivated and engaged sales team.

Celebrating Success and Rewarding Participants

Now for the fun part.

Remember, spiff programs aren’t solely defined by revenue-related sales success. Spiffs contribute to your team’s motivation, competition, and recognition culture.

For your spiff initiative to shine, you have to celebrate and reward your team in engaging ways. 

Here are a few ideas to do so:

• Public Recognition: Don’t underestimate the power of a public “shout-out.” Acknowledge top performers at team meetings, company-wide announcements, or even social media posts (with their permission, of course!). This public recognition validates their hard work and inspires others to strive for similar achievements.
• Leaderboards and Gamification: Inject some friendly competition into your spiff program with leaderboards that showcase top performers in real time. Consider incorporating gamification elements like points, badges, or virtual trophies to add an extra layer of fun and motivation.
• Tiered Rewards: Structure your rewards program with different tiers based on performance levels. This incentivizes continuous improvement and allows everyone to feel a sense of accomplishment as they progress through the tiers.
• Experiences Over Things: While traditional gifts and merchandise have their place, consider offering unique experiences as rewards. Think weekend getaways, tickets to sporting events, or personalized training opportunities. These create lasting memories and demonstrate your genuine appreciation.
• Instantaneous Rewards: Positive reinforcement works wonders. Offer instant rewards, like gift cards or bonus commissions, to help you achieve specific milestones. This provides immediate gratification and fuels continued effort.

Use spiffs to foster a culture of collaboration and knowledge sharing. Recognize not just individual achievements but also team victories and instances where team members supported each other’s success. This reinforces the importance of teamwork and creates a positive and motivating environment.

By implementing these strategies, you can transform your spiff program from a transactional system into a powerful tool for boosting morale, driving engagement, and celebrating the achievements of your sales team.

7 Spiff Examples for your GTM Team

Ready for some examples to consider for the rest of the year?

Below are seven creative spiff ideas designed to incentivize desired actions, celebrate achievements, and cultivate a positive sales environment while ensuring your spiff program complements, not replaces, a solid compensation plan.

1. Fast Start: Motivate your team to hit the ground running at the beginning of a quarter by offering a bonus commission (e.g., $100-$200) to the first X number of salespeople who close deals within the first week. This will jumpstart activity and set the tone for a strong quarter.

2. Upsell & Cross-Sell: Encourage expanding customer value by rewarding salespeople who achieve the highest number of upsells or cross-sells within a specific timeframe. This metric could be tied to revenue generated from upsells/cross-sells or the number of successful upsells/cross-sells completed.

3. Outbound Pipeline: Focus on building a healthy sales pipeline by rewarding the salesperson who adds the most outbound qualified leads to the CRM within a set period. This incentivizes proactive prospecting and ensures a steady flow of potential customers.

4. Mid-goal Milestone: Break down larger sales goals into smaller, achievable milestones. Offer a tiered reward system in which salespeople receive a bonus (e.g., a gift card, or an extra vacation day) for reaching specific milestones toward their overall quota. This keeps them motivated and provides a sense of accomplishment as they progress.

5. Retention: Customer retention is crucial for SaaS businesses. Recognize the salesperson with the highest customer retention rate within a specific period. This could be a bonus commission or a reward tied to the value of retained accounts.
   
6. Onboarding: A smooth onboarding experience is critical to customer satisfaction. Reward the salesperson whose new customers score the highest customer satisfaction during onboarding. This incentivizes them to prioritize a positive onboarding experience.

7. Teamwork: Create a team-based spiff to encourage collaboration and knowledge sharing. Offer a bonus or reward for the team that collectively achieves the highest sales target within a timeframe. This fosters a sense of camaraderie and motivates everyone to contribute to the team’s success.

Lessons Learned from Spiff Program Failures

Lastly, spiffs can be a game-changer for your sales team, but even the most well-intentioned programs can fall flat. Here are some key lessons learned from common spiff program failures to help you avoid these pitfalls:

• Misaligned Goals: Ensure your spiff program incentivizes behaviors directly contributing to your overall sales strategy. Don’t reward activity metrics that don’t translate to actual sales or long-term customer value.
• Unclear Communication: Clearly communicate all program details, including eligibility criteria, reward structures, and timelines. Ambiguity breeds confusion and frustration among your team.
• Unrealistic Targets: Setting unattainable goals can quickly demotivate your team. Balance ambition with achievability to ensure everyone has a fair shot at earning rewards.
• Overly Complex Programs: Keep your spiff program clear and easy to understand. Complex rules and calculations will create confusion and discourage participation.
• Lack of Transparency: Maintain transparency throughout the program. Share updates on leaderboards regularly and ensure everyone understands how rewards are calculated and awarded.
• One-Size-Fits-All Approach: Cater to individual preferences whenever possible. Offer various reward options to appeal to different motivators within your team.
• Short-Term Focus: While spiffs can provide a quick boost, consider the importance of long-term goals. Integrate your spiff program with your overall compensation plan for a holistic approach.
• Neglecting Recognition: Rewards are important, but take into account the power of public recognition. Celebrate achievements and acknowledge individual and team contributions.
• Poor Measurement and Tracking: Track key metrics to measure the effectiveness of your spiff program. Analyze data to identify what’s working and adjust accordingly to optimize future iterations.

By learning from these common pitfalls, you can design a spiff program that effectively motivates your team, drives desired sales behaviors and contributes to overall sales success.

Use QuotaPath to Simplify Your Spiff Program Management

We’ve explored the power of creative spiff programs to incentivize your team, celebrate achievements, and foster a positive sales environment. However, remember, spiffs are most effective when they complement, not replace, a solid base compensation plan.

You can design a spiff program that motivates your team and drives results by avoiding common pitfalls like misaligned goals, unclear communication, and unrealistic targets. Remember to prioritize clear communication, transparency, and various reward options to cater to different preferences. Track your program’s effectiveness and integrate it with your overall sales strategy for a holistic approach.

Implement spiffs with automated tracking

QuotaPath, the most adaptable commission tracking software on the market, offers a comprehensive sales performance management platform to streamline spiff program administration.

Our user-friendly interface makes creating, managing, and tracking your spiff programs easy. It ensures clear communication, real-time updates, and effortless reward distribution. Explore QuotaPath today and see how we can help you design and implement a spiff program that delivers actual results.

This is a guest blog from the data and AI company, Databricks.

Sales forecasting is supposed to make everyone’s lives easier. Sales and marketing have their targets. Customer services and accounting understand workloads and expected revenue. Despite this, a report found that 68% of companies miss their sales forecast by more than 10%.

Why such a huge discrepancy? Businesses aren’t using the right data or nearly enough of it. 

AI lead scoring is a strategy that improves forecast accuracy and empowers your organization with more efficient sales and marketing activities.

In this article, we’ll explain how AI lead scoring can benefit your business.

What is AI Lead Scoring?

AI lead scoring uses machine learning (ML) and predictive modeling to rank sales prospects. Data such as demographics and customer behavior train AI models. The AI then identifies the trends and patterns of your target audience. AI lead scoring drives marketing and sales optimization.

Data processed in AI lead scoring includes:

• Customer personal information
• Firmographics such as company size
• Engagement with emails and marketing campaigns
• Social media interactions
• Psychographic data such as interests and cultural beliefs
• Loyalty data, including purchase history and customer loyalty metrics

Image sourced from close.com

Using this information, the AI algorithms quickly identify the potential of each lead by assigning them a score. Lead scoring turns your sales pipeline into a cascading sales funnel of momentum. 

Traditional vs AI Lead Scoring

Traditional lead scoring has been around for about as long as the sales funnel has been a concept. It requires a hands-on, manual process from both sales and marketing professionals. 

Much of the scoring information comes from lead magnets. What is a lead magnet in marketing? It’s that free ebook or email newsletter you get prospects to sign up for.

Team members must seek out categorical information and rank it against baselines before assigning a score. The baselines typically come from ideal customer profiles (ICPs). Much of the scoring is down to the subjectivity of the person doing the ranking, and liable to human error.

Because AI uses historical data for accurate results, AI-based solutions allow organizations to automate and improve efficiencies in the sales pipeline.

AI lead scoring reduces the need for salespeople to be involved in the ranking process. It helps to eliminate human error, emotion, and bias from lead scoring. 

Let’s look at a breakdown comparing AI and traditional lead scoring:

The benefits of AI Lead Scoring

It takes considerable effort to set up an AI lead-scoring strategy. Is the ROI worth it?

Let’s take a look at some AI lead-scoring benefits:

• More accurate, less biased lead scoring: AI calculates without emotion or prior influence. The algorithm connects the dots to find quality leads that your team might miss.
• Reduced human error: automation reduces errors associated with manual entry such as duplicates.
• Increased flexibility: train models with new datasets to adjust for changing market trends. Lead scoring also scales with need without increasing the workloads on your team.  
• Saved time: automation reduces the need for manual lead scoring, increasing sales productivity. Your sales and marketing teams can spend more time engaging potential customers and growing your pipeline.
• Increased profits: your team focuses on the best leads for higher conversion rates.
• Integrated with business tools: connect your CRM, ERP, and other platforms for analysis and more precise modeling. Use scoring data in real time for more accurate demand planning and sales forecasting.
• Streamlines processes: AI not only enhances sales-related processes but also reduces manual workloads across various departments, such as inventory management and accounts payable, improving overall operational efficiency.
• Lower costs: eliminates manual scoring, reducing your labor overheads.

How AI optimizes sales forecasting

Sales forecasting is vital to your business’s strategic planning. It helps you better allocate resources and budget expenditures based on revenue projections. 

So how does predictive AI improve forecasting?

Precision of data-driven insights

AI lead scoring requires large volumes of data. While this can take some initial work, it pays off in dividends. Behavioral analytics offer new insights into your target audience and how to better engage with them. 

Predictive analytics also produce opportunities such as personalized marketing. AI-powered insights help your team tailor each interaction for a better customer experience and higher win rates. 

Record every touchpoint for more accurate lead scoring and forecasting.

For example, a recent survey of marketers identified aligning web content with search intent as the most effective use case for AI. With automated lead scoring, you can discover which pages to audit and which to leave alone.

Let’s say you have a landing page for your certification for data engineers course. Automated lead scoring shows that most visitors are data scientists, creating a mismatch. Your marketing team takes this insight and audits the page for better SEO keywords. 

You can flag the lower-performing pages for search engine optimization using data-driven insights. You can consider your new SEO strategy when generating your next sales forecast.

Better lead scoring

AI models identity patterns from data your sales team simply doesn’t have access to or the bandwidth to process. For example, website user behavioral data connects to your AI lead scoring. The algorithm identifies high-quality leads based on their browsing behavior.  

Better lead scoring will improve your sales numbers. It will also give you a more accurate idea of what’s happening in your funnel. Use this data to bolster your short and long-term sales forecasts.

Connection between marketing and sales

Lead scoring provides a pulse check on your sales pipeline. With human error and bias eliminated, there’s no one to point the finger at. AI lead scoring aligns marketing and sales with the cold, hard facts. 

Accurate lead scoring gives both teams a common system and promotes inter-departmental collaboration. To maximize the benefits of this alignment, it’s often necessary to hire marketers who are skilled in interpreting AI data and executing effective strategies. This can help increase lead quality and improve sales forecasting is in each department’s best interests.

Real-time predictions

AI lead scoring begins as soon as a prospect enters your pipeline. With each interaction, their score changes, becoming more precise.

All ranking data feeds into other business tools, such as sales forecasting. Over time, models adapt for greater accuracy, sending better data to those tools. In other words, the more data your AI lead scoring analyzes, the more accurate it becomes at predicting sales. 

It also helps you make more money. A recent survey found that 80% of global businesses saw increased revenue after implementing real-time data.

How to implement predictive lead scoring with AI

Customers interact with your brand in a wide variety of ways. When they enter the pipeline, you’ve already got ample information about their likelihood to make a purchase. However, you need to learn how to crack the code and decipher customer intent.

How do you put together a lead or account scoring strategy led by predictive AI?

1. Identify target audience

Sales team marketing tactics begin with knowing your target audience. Collaborate with your marketing and sales teams to create ideal customer profiles. You can base ICPs on market research and historical data but there may be a bit of guesswork at the beginning. 

What type of characteristics make up your ideal customer? Create specific details for each profile based on the following criteria:

• Demographics: age, gender, education, income, occupation, household size, geographic location
• Firmographics (B2B): company size, turnover, revenue, industry, existing tech stack, location
• Lead behavior: touchpoint interactions, marketing engagement, past purchase history
• Psychographics: values, attitudes, interests, buying habits
• Pain points: what challenge does your product solve for this customer?

For example, let’s look at an ICP for a company that provides marketing and sales automation:

• Businesses with 100+ employees
• Annual turnover exceeding 10 million dollars
• Multiple outbound sales channels
• Three-month buying decision process
• Ability to call international numbers with a local presence

Remember these are ideal customer profiles. Not every lead will be a perfect fit. It’s still up to identify the best opportunities—that’s where lead scoring enters the picture!

2. Gather data

You can’t start ranking new leads without any data. What sources of information will help you (or the AI) determine the value of a lead?

Build a data collection strategy that aligns with your ICPs, pulling in the right data from every relevant channel.

Some sources for lead scoring data include:

• Websites: track visitor activity while interacting with your web pages. Tracking pixels and cookies identify repeat visitors. You can also use website forms to gain contact information and other demographic details. Heatmaps and session recordings add another level of insight into user behavior.
• Business tools: customer relationship management (CRM) software and other apps are great sources.
• Social media: use a social media analytics tool to record prospect engagement rates and gather firmographic data. Incorporating a social media post generator can automate content creation, ensuring consistent engagement and data collection.
• Content marketing: email marketing tools and other solutions enable you to track clicks, open rates, and conversions for every prospect.
• Lead source: the origin of each lead is vital to lead scoring. Organic website traffic will have a different win rate than a customer referral. If historical data is scarce, consider using a Bayesian Neural Network (BNN) to make the most out of every dataset. You will use this data to train and evaluate your predictive model later on.
• Spam detection: not every interaction adds up to a positive. Some leads can be bots or disinterested users. For example, a freelance writer may have no use for your sales dialer, but they do want access to your most recent industry report.
  

3. Segment your leads

The goal of any lead scoring system is to evaluate potential customers for fit and interest. We can divide this into four basic categories: avoid, Stimulate Interest, Follow up, and Take Orders. 

The beauty of lead scoring is that you get a more granular classification of every lead, streamlining customer segmentation. A typical system uses scores from  0 to 100 or 0 to 1. You can usually adjust this to what works best for you. 

Prioritize scoring criteria in order of what you think is most valuable. Give more weight to the top factors by making them worth more points. As you move down the list, decrease the weight score for each category. 

If every box is ticked on an ICP, the lead score should add up to 100.

4. Set a lead score threshold

Your ideal customers are just that, ideal. These types of businesses or individuals are the unicorns your sales and marketing teams dream of. Here in the real world, you compromise on what prospects to spend your time and money on. 

Looking at the data so far, it’s time to set a minimum lead score. This will be the threshold for the “Avoid” category. Any lead that falls below this score can’t be ignored and forgotten. 

Start with a low threshold. This ensures you don’t miss out on opportunities, and soon, the predictive AI will hone in on an optimal score.

5. Train your AI model

Okay, so you have the foundation of a lead scoring system in place. The good news is that you aren’t going to rely on your team to manually tally up every individual score. It’s time to train your predictive AI.

Use separate data sets to train your AI. The first set will teach the AI as it looks for patterns. You will use the second set to test the accuracy of your trained AI.

The AI training process for lead scoring is as follows:

1. Gather historical customer and market data and form two sets of data.
2. Clean and process the data, removing duplicates and errors.
3. Train the AI with dataset one.
4. Test the AI with dataset two and evaluate for accuracy.
5. Deploy the model and start generating lead scores.
   
6. Monitor results and adjust

Now your AI lead scoring model is putting out scores nearly instantaneously. Sounds great, right? However, it’s time to evaluate the results. Use your CRM and sales analytics tools to monitor the results.

Key performance indicators (KPIs) to track include:

• Conversion rate
• Win rate
• Lead-to-opportunity ratio
• Sales velocity
• Revenue
• Customer lifetime value
• Lead score accuracy

Establish a baseline for every metric before implementing an AI solution. Compare the results. If performance is decreasing or staying put, it’s time to re-evaluate your lead scoring model. 

Use AI Lead Scoring to win more sales

Growth is great. When your business increases its total sales, everyone is busy. However, you don’t want to stretch your team out too thin. AI lead scoring ensures every prospect is rated fairly and without bias, saving your team valuable time. 

You can focus your resources on the best opportunities while preventing potential buyers from slipping away. Setting up an AI lead scoring system for your business takes time, but it’s worth it in the long run.

There are RevOps, Marketing Ops, and even Financial Operations, but have you heard of Field Operations?

These various operations roles exist to support and optimize their specific areas. However, where Field Operations differs from others is they offer direct support and optimization to geographically dispersed teams through various means.

RevOps vs. Sales Ops

An interview with RevOps Leader Christian Freese

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What is Field Ops

Field Operations is a business function within a company that supports and optimizes the work of its field teams.

Differences between RevOps and Field Ops

Two main areas distinguish RevOps from Field Ops: scope and objectives.

Here’s a breakdown of their key distinctions.

Scope:

• RevOps: Takes a holistic approach, encompassing all aspects of the customer lifecycle that contribute to revenue generation. This includes marketing, sales, customer success, and sometimes even finance and operations.

• Field Ops: This function focuses specifically on supporting and optimizing the work of geographically dispersed field teams. These teams typically include sales representatives, customer success managers, and field technicians.

Objectives:

• RevOps: Aims to align all revenue-generating activities across departments, streamline processes, and improve efficiency to maximize revenue. They focus on the big picture, ensuring smooth handoffs between stages of the customer journey.

• Field Ops: Prioritizes direct support for field teams to enhance their productivity and effectiveness. This involves streamlining their workflows, providing resources, and ensuring alignment with overall sales and customer success strategies.

Analogy:

Imagine a revenue generation process as a complex machine. RevOps is responsible for ensuring that all the machine’s parts (marketing, sales, customer success) work together efficiently. They maintain the machine and optimize its overall performance.

Meanwhile, Field Operations focuses on the smooth operation of specific components within the machine (the field teams). They provide lubrication and adjustments and ensure these components are functioning at their best.

When to Add Field Ops

There’s no one-size-fits-all answer to the exact growth stage when companies build a “field ops” function with embedded ops business partners. However, several factors can influence this decision:

Sales Team Size and Complexity

Often, companies establish a dedicated field ops function when their sales team reaches a critical mass. This might be around 50-100 sales reps, or even sooner if the sales organization has complexities like multiple channels, territories, or product lines, and distributed sales teams.

With a larger and more intricate sales structure, the need for dedicated support to streamline operations and ensure alignment with central strategies becomes more pressing.

Scaling Challenges

As a company scales its sales efforts, maintaining operational efficiency and supporting rep productivity becomes crucial. Field ops help automate processes, create playbooks, and provide on-the-ground support to navigate these challenges.

Data-Driven Decision Making

Field ops teams often play a crucial role in gathering and analyzing sales data. This data identifies operational bottlenecks, optimizes processes, and informs strategic decisions. As data becomes central to sales success, the need for a dedicated function to manage it grows.

Maturity of Sales Processes

Companies with immature sales processes or inconsistent practices can benefit significantly from a field ops function. These embedded business partners can help standardize processes, ensure best practices are followed, and drive overall sales effectiveness.

Here are some additional considerations:

• Budgetary Constraints: Building a dedicated field ops team comes with additional costs. Smaller companies or those with limited resources might leverage other solutions like outsourcing or utilizing existing sales leadership to handle some field ops functions.

•  Company Culture: Some companies take a more centralized, top-down approach to sales, while others prefer a more distributed model with empowered sales teams. The company culture will influence the need and structure of a field ops function.

In conclusion, while there’s no magic number, companies typically build a field ops function with embedded ops business partners when their sales teams reach a critical size and complexity, encounter scaling challenges, prioritize data-driven decision-making, or require support in maturing their sales processes.  The timing will depend on the company’s unique circumstances and growth trajectory.

About QuotaPath

QuotaPath supports field ops by providing a centralized location for automated commissions and forecasted earnings and attainment. This makes it suitable for distributed sales and operations teams, building transparency and trust. 

To learn more, chat with our team or try QuotaPath for yourself with a free commission tracking trial.

Instilling a culture of financial accountability amongst your employees is good for business.

So much so, that a study conducted by the Aberdeen Group found that companies with strong financial accountability practices experience 21% higher profitability compared to those without. This suggests a clear link between financial awareness and improved efficiency.

Empowering employees to be financially accountable also helps them align their work with the business’s goals, making it more likely to achieve said goals. Additionally, financial accountability increases transparency within your organization and, therefore, trust. 

When your team understands the financial impact of their decisions, they’re more likely to make choices that benefit the company’s bottom line. This can range from minimizing waste and maximizing resource utilization to focusing efforts on tasks (and sales) with the highest return on investment.

Financial accountability isn’t just about saving money, it’s about building a more engaged and effective workforce, which translates to better decision-making, increased efficiency, and a more positive work environment.

In this blog, we’ll explore 7 strategies to build financial accountability among employees, improve financial transparency, and achieve your revenue goals together.

7 Best Practices to Increase Employee Financial Accountability

There are many best practices for cultivating financial accountability within your organization, but we’ve selected five that we’ve found most effective. 

Regularly Communicate Revenue & Retention Targets

First and foremost, your leadership should consistently communicate the organization’s key business goals, and progress toward those. 

Transparency fosters trust and empowers employees to see the bigger picture.  When everyone understands the company’s strategic objectives, they can better align their individual efforts and make informed decisions that contribute to overall success.  

Regular updates on progress towards goals,  whether positive or negative,  keep everyone engaged and motivated. This open communication loop ensures everyone is rowing in the same direction,  ultimately leading to a more financially accountable and successful organization.

• Transparency and Alignment: Make sure everyone in the company understands the revenue and retention targets, and how their individual roles contribute to achieving them.
• Regular Tracking and Communication: Regularly monitor progress towards these targets and communicate updates to the team. This fosters a sense of shared ownership and accountability.
• Weekly Meetings: Consider holding regular meetings (weekly, bi-weekly, or monthly depending on your company’s pace) to discuss financial performance, upcoming goals, and potential challenges. This fosters open communication and keeps everyone aligned.
• Actionable Outcomes: End meetings with clear action items and assigned responsibilities. This ensures accountability and helps track progress towards achieving financial objectives.

Goal Tracking

Once you’ve established clear targets and fostered transparency around them, it’s crucial to equip your employees with the tools they need to track progress. This empowers them to take ownership of their goals and fosters a sense of healthy competition.

Tailored Tracking for Different Teams:

• Go-to-Market Teams:  For teams on incentive pay, tools like QuotaPath offer valuable insights. Real-time and forecasted earnings data allows them to see their impact on the bottom line and adjust strategies accordingly. This fosters a results-oriented mindset and motivates them to achieve financial targets.
• Non-Incentive Teams: Alternative methods can be implemented for teams without incentive plans. Gamification—incorporating game mechanics like points, leaderboards, and badges—can inject a fun element into goal tracking and encourage friendly competition.

Data Visualization:

Another powerful tool is data visualization. Interactive dashboards and reports allow employees to see progress visually, understand their position relative to goals, and identify any potential roadblocks. This transparency empowers them to make data-driven decisions and course-correct as needed.

By providing a variety of goal-tracking methods, you cater to different learning styles and preferences within your workforce.  Ultimately, the goal is to ensure everyone has a clear understanding of their progress and how it contributes to achieving the company’s financial objectives.

How to Align Your Comp Plans to North Star Metrics

Business efficiency metrics, such as profitability and line of sight to cash flow, are a top priority for most SaaS companies and startups.

Take Me to Blog

Align Compensation with Financial Performance

Next, align your compensation plans with financial performance to create a powerful incentive for employees to prioritize the company’s bottom line. 

It sounds like a no-brainer, but in our report, we found that 39% of leaders failed to align their compensation plans with targets. 

Here are two key strategies to consider:

• Performance-Based Incentives: Implementing performance-based bonuses or commissions directly ties employee rewards to achieving financial goals. This fosters a results-oriented mindset and motivates employees to make decisions that contribute to financial success.  When employees see a clear link between their efforts and their compensation, they’re more likely to go the extra mile and become financially invested in the company’s well-being.
• Profit-sharing: Profit-sharing programs offer another compelling approach. By giving employees a stake in the company’s financial success, you create a sense of ownership and a shared destiny. This fosters a collaborative environment where everyone is working towards the same goal – maximizing profits.  Employees become more mindful of responsible resource allocation and cost-saving measures, as their own financial well-being is directly tied to the company’s profitability.

By implementing these strategies, you can create a win-win situation. 

Employees feel valued and motivated by their compensation structure, while the company benefits from a more financially accountable workforce that’s driven to achieve financial 

Rely on RevOps as Data Storytellers

Our recommendation is that you lean on your data storytellers to share past performance, progress, and projections.

AKA: RevOps. 

RevOps teams are uniquely positioned for this role as the translator, transforming raw data into a clear and compelling story for the entire company. They often oversee the setup and monitoring of performance metrics for Go-to-Market (GTM) teams, giving them a comprehensive understanding of the data that drives financial success.  

By leveraging their expertise, you can:

• Communicate Target Setting: RevOps can explain the reasoning behind target setting, highlighting factors like market trends, historical performance, and competitor analysis. This transparency builds trust and empowers employees to see the bigger picture.
  
• Showcase Past Performance: RevOps can present past performance data in a clear and concise format, allowing employees to understand the company’s financial trajectory. This historical context helps them see their individual contributions within a broader framework.
  
• Project Future Performance: Using current performance data and market insights, RevOps can provide financial projections and forecasts. This empowers employees to anticipate future challenges and opportunities and make data-driven decisions aligned with the company’s financial goals.

Relying on RevOps as data storytellers can foster a culture of transparency and empower your employees to make financially responsible decisions that drive the company’s success.

Share Budget, Runway (if applicable)

Another best practice is to share the budget at the department or team levels and, when applicable, your organization’s runway and valuation with the entire company. 

Budget Talks: Sharing the budget empowers employees to understand the financial constraints the company operates under. This allows them to make informed decisions that align with financial goals and avoid unnecessary spending. Visualizations like charts and graphs can make budget information clear and easy to understand for everyone, regardless of their financial background.

Runway Clarity: If your company is a startup, consider sharing runway information. This helps employees understand how long the company can operate with existing cash flow before needing additional funding. 

Be sure to clearly define what the runway represents,  such as the number of months the company can continue operations.

Valuation Transparency: Striking a balance between transparency and sensitivity is key when considering valuation. While sharing a specific valuation figure can be sensitive, focusing on growth metrics and overall company health can paint a clear picture of the company’s financial well-being. 

 Employees can gain valuable insights into the company’s trajectory without being privy to potentially confidential valuation details.

By openly sharing relevant financial information, you empower your employees, build trust, and encourage responsible financial decision-making throughout the organization. This transparency fosters a sense of ownership and motivates employees to contribute to the company’s continued financial success.

Leverage Technology for Financial Visibility

We’ve mentioned some tools above that can help in this arena, including QuotaPath and data visualization platforms (we use Mode, for example). Some other ones to consider include: 

• Financial Reporting Tools: Implement financial reporting tools that provide employees with easy access to relevant financial data. Interactive dashboards with clear visualizations like charts and graphs make the data readily understandable, regardless of an employee’s financial background.  This empowers them to see how their daily activities contribute to the company’s financial performance.
  
• Budgeting Software: Consider implementing budgeting software that allows employees to see how their departmental spending aligns with the overall budget. This transparency fosters a sense of ownership. When employees see the direct impact of their spending decisions, they’re more likely to be mindful of costs and make responsible resource allocation choices.  Budgeting software can also empower them to identify areas for potential savings and contribute to overall financial efficiency.

By leveraging technology to democratize access to financial data, you empower your employees and cultivate a culture of financial accountability that drives better decision-making and ultimately fuels the company’s financial success.

Celebrate Achievements and Recognize Effort

Lastly, celebrate!

Financial accountability isn’t just about hitting targets; it’s about creating a culture of continuous improvement and celebrating progress along the way.

 Here’s how to acknowledge both achievements and the ongoing journey towards financial responsibility:

• Milestone Celebrations: Reaching financial milestones is a cause for celebration! Publicly recognize and celebrate these achievements. This reinforces the importance of financial responsibility and motivates employees to strive for continued success. Company-wide announcements, team lunches, or bonus awards can all be effective ways to show appreciation.
• Effort and Improvement: The road to financial success isn’t always smooth. Recognize and reward employees who demonstrate a commitment to financial accountability, even if the outcome isn’t perfect. Perhaps an employee identified a cost-saving opportunity or went the extra mile to ensure responsible resource allocation. Praising such efforts reinforces the value of responsible financial behavior and creates a culture of learning from experiences.

By acknowledging both achievements and ongoing efforts, you foster a growth mindset within your organization. Employees feel valued for their contributions, regardless of the final outcome. This motivates them to continuously strive for financial responsibility and contribute to the company’s long-term financial success.

Start Building Financial Accountability

Financial accountability isn’t a magic trick; it’s a carefully crafted strategy for empowering your employees and fostering a culture of shared financial responsibility. By implementing the practices outlined above, you can create a winning formula for your organization:

1. Regularly Communicate Revenue & Retention Targets: Transparency fosters ownership and aligns individual efforts with overall goals.
2. Utilize Goal Tracking Methods: Equip employees with tools to see their progress and the company’s trajectory.
3. Align Compensation with Performance: Motivate employees by directly linking rewards to achieving financial goals.
4. Rely on RevOps as Data Storytellers: RevOps can translate complex data into a clear narrative, fostering understanding and trust.
5. Share Budget & Runway (if applicable): Openness builds trust and empowers employees to make informed decisions.
6. Leverage Technology for Visibility: Financial reporting tools and budgeting software democratize access to financial data.
7. Celebrate Achievements & Recognize Effort: Acknowledge milestones and celebrate the journey towards financial responsibility.

By embracing these practices, you can unlock the full potential of your workforce. Employees who understand the financial landscape, are equipped with the right tools, and feel valued for their contributions become powerful allies in driving your company’s financial success. 

So, take the first step today and start building a culture of financial accountability within your organization. The rewards will be well worth the investment.

To learn more about how QuotaPath builds financial accountability over earnings, attainment, and progress toward company targets, talk to our team today or start a free trial. 

The role of RevOps and the entire RevOps market has encountered explosive growth over the past couple of years.

In 2020, only 33% of companies had a RevOps function. Today, that number has increased to 48%, and Gartner predicts that 75% of the highest-growth companies will adopt a RevOps model by 2025.

Buyer preferences, behaviors, and rising expectations have driven this trend, making a self-directed and consistent experience throughout the buyer’s journey essential to revenue growth and retention.

RevOps has gained momentum as businesses see its effectiveness. For instance, Forrester research found that organizations that align the people, process, and technology involved in the demand engine experience 36% more revenue growth and up to 28% more profitability.

Also, 21% of companies that introduced a RevOps function saw greater alignment and productivity resulting in an increased operating margin. An additional 13% of businesses experienced better revenue growth after adopting a RevOps model.

The rise of the RevOps market was on full display last year. How has that high continued throughout 2024?

Read on to learn about RevOps jobs growth, salary, roles, technology, and other trends.

RevOps Jobs Growth

RevOps job growth over recent years is evident.

A recent study by the Revenue Operations Alliance found that 59.8% of organizations have only had a revenue operations function for one to two years. Our search on ZipRecruiter unearthed over 174,000 RevOps job postings. And the number will continue increasing as RevOps is now the fastest-growing job in America, according to Forbes.

The top RevOps job title is presently Revenue Operations Analyst per ZipRecruiter. Another popular role is Head of Revenue Operations in small or medium-sized companies, also known as Chief Revenue Officer at large enterprises, according to LinkedIn. These roles are often found in tech-centric geographic locations like Los Angeles, San Francisco, and New York.

RevOps Salary

As of May 30, 2024, the average annual salary for a RevOps role in the United States is $110,000 a year according to ZipRecruiter. The majority of RevOps salaries range from $85,000 to $128,000 annually across the United States. Note: the average pay range for RevOps roles varies little based on geographic location.

Betts reports a sustained rise in RevOps base salaries in 2023, following a 10% year-over-year increase observed in 2022. Betts also noted that a RevOps manager typically earns 20% more than a comparable sales operations manager role.

Below is a chart listing the top 10 cities for salaries above the national average identified by ZipRecruiter.

As the average salaries vary by as little as 10% between these locations, it was suggested that the best way to optimize your income is by considering a location with a lower cost of living.

RevOps Role

RevOps is responsible for aligning the entire revenue team, generating data, and creating visibility into crucial business metrics and processes. Their ultimate goal is driving efficiencies and predictable revenue growth.

In its earliest form, RevOps was intended to break down the silos between sales, marketing, and customer success for a more seamless customer journey and improved customer experience.

As the marketplace continues to evolve it has become a more structured process that changes as a company scales. Establishing and growing a RevOps practice is not a one-size-fits-all process and varies for each organization.

In small companies with less than 10 employees, you may or may not have a RevOps presence. However, by the time you achieve a 10-25% growth rate and approximately 20 employees, you should establish a RevOps role to guide you through this volatile period. This is when you build and refine processes while anticipating opportunities and challenges.

Once you achieve $1 million in revenue with sustained growth rates of 25% or more your RevOps function becomes more strategic. The focus shifts to product-market fit and scaling growth efficiently.

RevOps Market: Technology

As RevOps has grown in popularity, so has technology to support this role.

The RevOps platform market totaled US$ 3,652.3 million in 2023. This segment of the technology market grew at 15.2% CAGR from 2018 to 2022 and is expected to grow at 17.3% CAGR between 2023 and 2033.

This rate of growth is said to be driven by the need to streamline sales business processes. Data-driven collaboration combined with the pursuit of predictable business growth is expected to motivate the continued expansion of the RevOps platform market.

Top RevOps Tools include: 

• Sales process compliance and CRM data hygiene platforms like Weflow
• Revenue intelligence platforms like Gong
• Revenue forecasting platforms like InsightSquared
• Revenue attribution platforms like Dreamdata
• Go-to-market planning platforms like Fullcast.io
• ABM and buyer intent platforms like Demandbase
• Sales engagement platforms like Salesloft
• Data management platforms like Coefficient
• Sales compensation management platforms like QuotaPath

The increased adoption of these types of tools has resulted in greater sales productivity, internal customer satisfaction, and reduced go-to-market (GTM) strategy expenses.

Other RevOps Trends

As RevOps continues to grow it evolves in response to market changes. Here are some of the latest trends we’ve seen.

A Shift From Growth-At-All-Costs to Retention and Expansion

New business is tougher to acquire. To overcome this challenge, businesses are focusing on customer longevity, retention, cross-sells, and upsells to drive growth. “We focused on top of funnel in 2023. Today, we’re focusing more on identifying expansions and nailing renewals,” Jen Igartua said.

Increasing AI Use

RevOps analyzes a lot of data. AI delivers deeper insights and analytics than a human and in less time.

“At QuotaPath, we’ve used AI to rework our loss and churn reasons. Take all of the emails and notes from your reps across all your opportunities, load it into an AI tool, and it will tell you more about the biggest reasons for lost opportunities,” said VP of RevOps Ryan Milligan.

Cold Outreach is More Targeted

One way of boosting sales efficiency and effectiveness is by targeting prospects that match the ideal customer profile (ICP). Then communications are more relevant to recipients and elicit a better response rate. “Outbound is never dead, but good outbound is hard to keep alive,” Jeff Ignacio said.

Tech Stack ROI is Crucial

Tighter budgets mean every tech platform must prove its worth to remain in the stack. “If you claim your product enables leaders to be more productive, what is the time and dollar savings tied to that?” Daphne said.

Selling to Retainable Customers is a Priority

There’s been a mindset shift. Winning customers used to be the goal. Now, the priority is winning customers who are most likely to renew. Inspire this behavior by incentivizing it. “If you give BDRs $50 for every demo that occurs, give them another $25 if it’s an ICP demo,” Ryan said. “Reward higher commission rates for your sales team if it’s an ICP account.”

About QuotaPath

QuotaPath supports RevOps professionals and scaling revenue teams with resources and solutions that help them automate sales commissions, provide visibility into compensation, and motivate reps through forecasted earnings.

To learn more, chat with our team or try QuotaPath for yourself with a free 30-day trial.

Businesses strive for growth in all areas, and we often look at sales as the leading driver of growth. 

More sales = more success. 

It’s a good start, but sales data can tell you so much more about your business.

Sales data analysis can help you gain deeper insights, assess strategies, find weak points, and make improvements to your business operations. 

In this article, we’ve put together a list of reasons why you should utilize sales data analysis and the practical steps you can take to do so.

7 reasons why sales data analysis is vital for business success

We cannot emphasize enough that sales data can tell you a lot about your business—more than just how many products you’re selling.

Sales data analysis offers insights into a variety of business operations, some of which might surprise you.

So, let’s look at the benefits of sales data analysis and how you can achieve them.

1. Focusing on products and strategies that work

Sales data analysis can help you determine which products and sales strategies work best for your brand. 

You can identify:

• High-performing products

• Most effective sales and marketing channels

• Locations where certain products sell best

• Your target audience and their needs

• Which marketing campaigns drive the most engagement and sales

Sales data analysis can also help you identify weaknesses and roadblocks in your sales process. 

These weaknesses include:

• Unpopular products that you can cut from your line or work on improving

• Underperforming sales employees who might need extra training and guidance

• R&D that lacks innovation or awareness of customer needs

• A lack of cohesion and collaboration between departments 

• Gaps in your tech stack that you can fill with tools to streamline operations

An effective sales report can provide a comprehensive overview of these aspects, enabling you to make data-driven decisions and optimize your sales strategies accordingly.

How?

Creating successful sales strategies involves a general overview of what’s working and what isn’t. You’ll want to look for high and low points in your sales processes:

• Product performance: across demographics and locations

• Customer demographics: where to find your target audience

• Sales team performance: how successful your team is at selling

• Marketing campaign ROI: sales targets from marketing campaigns and which campaigns are hits and misses

• Sales channel data: which channels are popular vs. which few people use

2. Better customer relationships

Sales data contains powerful insights into your customers. 

These insights allow you to design products and services that meet your customers’ needs, streamline the buying process, improve your customer experience, predict future behavior, and create marketing campaigns that appeal to your audience.

You can also assess whether your customer-facing teams have all the tools they need to foster customer relationships. If your sales reps need access to customer data when making a sales call, for example, you can implement a preview dialer.

Happy customers become repeat customers and create up and cross-selling opportunities. They also become brand advocates, spreading awareness across review sites, social media, and word-of-mouth recommendations.

How?

For better customer insights, monitor sales data analytics like:

• Product performance across different demographics: age, gender, location, etc. This can help you focus your efforts on your target audience

• Churn rates: higher-than-average churn rates can indicate problems with your products or sales process

3. Improve marketing strategies 

Sales and marketing go hand in hand. Good products are easy to market, and good marketing generates more sales, which in turn means more money for good products and marketing.

Understanding sales data that affects customers can help you create better marketing strategies. 

How?

To understand which marketing strategies generate the best sales, look at:

• Sales channel metrics: depending on what kind of business you are (B2B, B2C, etc.), sales data analysis lets you see your most successful channels and determine a target audience for your marketing efforts 

• ROI: how much you spent on your marketing campaign vs. how many sales it brought in

• Product popularity: you can determine which products need a marketing boost and how certain campaigns might be affecting sales of certain products

• Customer sentiment: good marketing campaigns create online buzz and customer engagement, leading to better sales

4. Generate and convert more leads

Sales data analysis can help you generate and convert more leads. It can also help you hone your lead-nurturing process. 

Converting leads requires a deep understanding of your customers and their behaviors, which sales data analysis can help you achieve. 

For example, your lead conversion rates might be low due to inadequate pairing of leads with qualified sales reps. Looking at your numbers, you might see the opportunity to implement a skill-based routing system. 

How?

To generate, nurture, and convert more leads, look at sales data like:

• Lead generation: the number of leads you’re generating overall

• Lead conversion rates: the number of leads that are converted
• Average sales length cycle: how your sales cycle compares to industry benchmarks. Lengthy sales cycles are the norm in B2B sales, but B2C sales need to move faster

• Sales rep performance: are your team hitting KPIs? If not, you might have problems with products, productivity, or sales tools

5. Keep up with trends

Sales data analysis can keep you agile in a fast-moving market. 

Businesses often arrive late to the party. A trend reaches its height, and the business becomes aware of it and scrambles to put something together. By the time they’re ready to release a new product or marketing campaign, the trend has passed, and the business is left looking a bit washed up.

You never want to be the “How do you do, fellow kids?” brand. 

Keeping up with trends can help you stay relevant, adapt to changing customer needs, and identify gaps in the market. 

How?

To keep up with fast-moving trends, look at:

• Product performance: look for high-demand products or a sudden surge in popularity

• Social media data: analyze your audience’s posts and content to find patterns, trends, or gaps in customer needs that your brand could fill

• Competitor analysis: if your competitors are gaining market share in sales of certain products, that might indicate an emerging trend

You also need to ensure the accuracy and reliability of your data through robust data validation techniques. By validating your data regularly, you can trust that your analyses reflect the most current and accurate information, empowering you to make informed decisions and stay ahead of market shifts.

6. Improved employee satisfaction and productivity 

Sales data can tell you a lot about your employees, too. If your sales department has a high turnover, you might have problems. 

Perhaps your team members are struggling to connect with leads effectively, indicating a need for better training or tools. For instance, implementing cold calling software could streamline their outreach efforts and improve their success rates. 

Being aware of how your employees are doing and taking steps to address issues is vital to running a successful business. A happy, productive sales team will perform far better than an unengaged one where half the team is looking for other jobs. 

Utilizing these strategies to grow your business can lead to a significant improvement in team performance and customer satisfaction.

How?

To help you retain talent, you can monitor:

• Employee retention rates: monitor your retention compared to industry benchmarks

• Employee satisfaction score: conduct surveys and interviews

• Sales per team member: if a sales rep’s sales are suddenly declining, they might be disengaging from your company

7. Better financial management

Sales data analysis can help you manage your company’s finances better. 

Current sales data can tell you about performance, products, and sales reps—essentially, all the things we’ve discussed in this article. Understanding this data lets you find places to cut costs, increase spending, or streamline operations. 

For instance, by analyzing customer behavior and market demand trends, you can implement dynamic pricing strategies, adjusting prices in real-time to maximize revenue. Sales data analysis also allows you to predict future sales, making it easier to allocate resources going forward.

Additionally, analyzing payout trends can reveal insights into your financial health and aid in optimizing your budget allocation.

How?

You can make more accurate financial decisions by monitoring sales data like:

• Predicted profit vs. actual profit: are you hitting targets? If not, sales data helps you work out why

• Sales revenue analysis: products that sell well, channels that bring in the most sales, and overall profits

Some extra tips

Here are a couple of extra tips to help you get the most out of your sales data analysis.

Automate

Data analysis can be complicated and messy. The best way to collect, store, and analyze data is to utilize automation tools.

There are lots of tools online to help you manage sales data, from one-time purchases to SaaS providers. Practical tools like hardware and data warehousing are also important. 

Evaluate your needs and look for tools that specifically address those needs. Also, look for integrations with your existing tools to make the transition easier.

Make the data work for you

Don’t be afraid to get creative with your sales data analysis. Look at how certain variables affect areas of performance to help you make better decisions.

Does focusing sales and marketing strategies on a specific demographic increase or decrease sales? Does switching focus from B2C to solely B2B sales improve profits?

Sales data analysis can help you answer these questions. 

Collecting sales data

Let’s take a look at what types of sales metrics to track and why:

Revenue per Sales Rep – Helps assess individual performance and identify top-performing reps to replicate best practices.

Quota Attainment – Measures how well sales reps are hitting their targets, which is crucial for evaluating compensation plans and performance.

Sales Cycle Length – Tracks how long it takes to close a deal, helping optimize sales processes and improve efficiency.

Average Deal Size – Indicates revenue potential per sale and helps in forecasting and sales strategy adjustments.

Win Rate (Conversion Rate) – Shows the percentage of deals won versus total opportunities, useful for diagnosing pipeline health.

Lead-to-Close Ratio – Measures the efficiency of the sales funnel, highlighting areas where prospects drop off.

Customer Acquisition Cost (CAC) – Helps determine how much is spent on acquiring each customer and whether sales strategies are cost-effective.

Customer Lifetime Value (CLV) – Predicts long-term revenue from a customer, ensuring sales efforts are focused on high-value clients.

Churn Rate – Indicates the percentage of customers lost over time, helping refine sales strategies to improve retention.

Sales Pipeline Velocity – Shows how quickly deals move through the pipeline, allowing teams to address bottlenecks.

Commission Payout Accuracy – Ensures sales reps are paid correctly, maintaining trust and motivation in compensation plans.

Product Mix Performance – Identifies which products or services contribute the most to revenue, aiding in sales prioritization.

Discount Utilization Rate – Tracks how often reps use discounts to close deals, ensuring pricing strategies remain profitable.

Sales Forecast Accuracy – Measures the reliability of sales projections to improve strategic decision-making.

Upsell & Cross-Sell Rate – Reveals additional revenue generated from existing customers, a key metric for maximizing profitability.

How to pick the right sales data to analyze

But what data you should select?

This will vary on the stage of your org, sales cycle, team set up and more, but here a few things to keep in mind.

• Choose metrics that directly impact revenue growth, customer retention, or efficiency improvements.
• Track data that can drive meaningful decisions, such as adjusting compensation plans or refining sales processes.
• Ensure the data is reliable and easily extracted from your CRM or sales tools.
• Prioritize metrics that reflect different stages of your sales process, from lead generation to closed deals.
• Balance between tracking overall sales trends and evaluating individual rep effectiveness.
• Collect data that helps understand customer behavior, such as buying patterns, churn risk, and upsell opportunities.
• Choose metrics that allow for benchmarking against past performance to measure improvement.
• Distinguish between process efficiency (speed of sales cycles) and effectiveness (win rates, revenue per rep).

How often should you be running sales data analysis?

The frequency of sales data analysis depends on the type of metrics tracked and business goals.

Daily or real-time tracking is essential for monitoring pipeline updates, rep performance, and lead movement to ensure sales teams stay proactive. Weekly reviews should focus on win/loss trends, quota attainment, and sales activity to identify early signs of success or challenges. Monthly analysis is crucial for evaluating revenue performance, deal velocity, and commission payout accuracy to maintain transparency and efficiency.

On a quarterly basis, businesses should assess compensation plan effectiveness, market trends, and customer retention to refine strategies.

Annually, a comprehensive review of sales processes, forecasting, and goal-setting helps ensure alignment with long-term business objectives. The right cadence balances proactive decision-making with strategic oversight, optimizing both short-term performance and long-term growth.

Why sales data analysis is vital for business success

Sales data analysis is a powerful tool for evaluating, improving, and growing your business. 

Sales data can tell you a lot about your business operations, offering surprising insights into both sales-specific and non-sales-specific processes. 

Utilize sales data analysis to better understand your audience, improve your sales processes, innovate your products, and support your sales employees. Sales data analysis can provide a holistic view of your organization and lead your business to greater success.

After months of crafting a sales compensation plan and meticulously calculating quotas and commissions, you roll it out with fanfare.

But instead of attainment results to match, you’re met with missed targets, a revolving door of frustrated reps, and a growing misalignment with your overall business goals. 

Unfortunately, this scenario isn’t uncommon. 

A shocking 39% of revenue leaders admit their compensation plans fail to align with business targets. What’s more, 30% said their plans don’t motivate their reps. 

 Why? Because too often, companies rely on outdated data, gut feelings, or worse yet, simply copying plans that worked for someone else.

This traditional approach leads to a slew of problems.

Setting fair and achievable quotas becomes a guessing game. Compensation structures might not incentivize the behaviors that drive your company’s “north star” metrics, like customer lifetime value or gross revenue retention.

Confusion and a lack of transparency can demotivate even the best reps. And perhaps most concerning, you’re left in the dark about the true impact and cost of your compensation plan on revenue.

But what if there was a better way?

Below, we highlight how QuotaPath positions customers to make informed sales compensation decisions. 

By leveraging powerful analytics, actionable insights, and an adaptable user experience, QuotaPath helps you build and revise high-performing comp plans that motivate your team, align with your goals, and ultimately, drive sustainable revenue growth.

Unlocking the Power of Sales Compensation Data 

Intuition and guesswork might have a place in the world, but designing a high-performing sales compensation plan is not one of them. 

The key to unlocking true effectiveness lies in the power of data.

QuotaPath empowers revenue leaders with a wealth of rich sales performance information, giving them the insights needed to build and refine compensation strategies that drive results.

The Data Advantage

Imagine having a crystal ball that reveals your sales team’s historical performance, individual and team contributions, and even attainment rates for different quota levels. This isn’t magic; it’s the power of QuotaPath’s data. 

By providing access to these crucial data points, QuotaPath equips you to:

• Set Smarter Goals: Historical sales data allows you to identify trends and seasonality, enabling you to set realistic yet challenging quotas paired with accelerators and bonuses to offset slower periods. This data can also be factored in with market forecasts to ensure your goals are aligned with broader industry trends.
• Identify Your All-Stars: QuotaPath dives deep into individual and team performance metrics. You can easily identify top performers and understand the behaviors that drive their success. Are they selling the most multi-year contracts? Most profitable products? Do they discount the least? You can use these insights to tailor compensation plans to incentivize those behaviors across your entire team.
• Uncover Hidden Gems: Sometimes, hidden potential lies beneath the surface. QuotaPath’s data can reveal reps who consistently exceed specific metrics, even if they fall short of overall quotas. These “unsung heroes” might benefit from targeted coaching or adjustments to their territories or quotas to unlock their full potential.

Data-Driven Decision Making

Data is powerful, but without insights, it’s just numbers.

QuotaPath goes beyond raw data, transforming it into actionable intelligence that empowers you to make informed decisions about your compensation strategy. 

Access to past compensation plans and performances gives leaders the information they need to confidently adjust and set quotas. This is especially timely, as 91% of teams missed the quota last year due to market conditions and unrealistic expectations.

Plus, QuotaPath allows you to analyze how different compensation structures impact metrics beyond just pure sales volume. 

If you want to incentivize customer lifetime value (CLTV) or retention, we can help you design plans that reward reps for upselling, renewals, and other behaviors that drive long-term customer relationships and recurring revenue.

Customized Commission Reporting

QuotaPath’s commission reporting measures the business value and performance of the GTM team’s compensation plans and performance.

Check Out Reports

Our platform also highlights your top, middle, and bottom performers so that you can tailor compensation plans to incentivize those behaviors across the entire team. This can include things like rewarding reps who focus on selling to ideal customer profiles (ICPs), closing multi-year deals, or driving early customer renewals.

Scenario Modeling/Testing: The Crystal Ball of Compensation

Lastly, QuotaPath developed modeling and testing tools to project the total compensation costs based on performance bands and use historical data against new plans to see how they’d perform. 

This allows you to create “what-if” scenarios by modeling different compensation structures and their potential impact on key metrics. Imagine testing a commission plan that rewards early renewals before you actually implement it. QuotaPath can show you the predicted impact on churn rates and revenue, allowing you to refine your plan before launch.

This data-driven approach to testing eliminates the guesswork and allows you to make adjustments before rolling out a new compensation plan, saving you time, money, and frustration in the long run.

Building Powerful Compensation Strategies with QuotaPath 

Next, the business landscape is anything but static. 

Market conditions shift, team structures evolve, and your North Star metrics might need to adjust accordingly. 

A truly powerful compensation strategy and process needs to be adaptable to keep pace with these changes.

QuotaPath offers you the flexibility and adaptability to manage your comp plans dynamically. 

Easily adjust commission structures and quotas as needed, using the testing and modeling tools along the way to avoid guesswork. This allows you to adapt your comp plans with your business goals based on market volatility. 

Here’s where QuotaPath truly shines:

Dynamic Adjustments: When market trends call for quota adjustments, QuotaPath’s user-friendly interface allows you to make adjustments to quotas and commission structures quickly and easily. The same holds true for individuals measured on aggregated teams or rolled-up quotas and reps who shift between teams.

Make quick edits without needing a call to support to maintain seamless automation. 

Transparency is Key: Building trust and motivation within your salesforce starts with transparency. QuotaPath fosters this by providing reps with real-time visibility into their earnings and clear, easy-to-understand commission structures. This eliminates confusion or hidden calculations. 

Reps can see exactly how their performance translates to their paycheck, keeping them engaged and focused on achieving their goals.

Trusting the Data: Through trusted integrations with CRMs, ERPs, data analytics and business intelligence, spreadsheets, and payment accounting systems, leaders can trust the data feeding QuotaPath is accurate. This creates seamless workflows, shared naming conventions, and data hygiene. 

The Data-Driven Advantage

Building a high-performing sales compensation plan requires a data-driven approach, seamless workflows, and partnership mentalities rooted in first-hand expertise. That’s where QuotaPath steps in.

QuotaPath empowers revenue leaders with the tools and insights needed to make informed decisions about their compensation strategies.

By leveraging QuotaPath’s data analytics, you can unlock a multitude of benefits:

• Hit Your Numbers Consistently: Set quotas with confidence based on historical performance and market trends. This not only keeps your reps motivated with achievable goals, but also allows for more accurate revenue forecasting.
• Build a Winning Team: Identify and reward your top performers. Analyze their winning behaviors and tailor compensation plans to incentivize those behaviors across your entire team. This fosters a culture of high performance and drives overall sales effectiveness.
• Reduce Turnover: A demotivated salesforce is a revolving door. QuotaPath’s transparent commission structures and real-time earnings visibility keep reps engaged and focused on achieving their goals, leading to a more stable and productive sales team.
• Maximize ROI: Stop throwing money at a broken system. QuotaPath allows you to test different compensation structures and measure their impact on key metrics. This data-driven approach ensures you’re getting the most out of your compensation investment.

Ultimately, QuotaPath goes beyond just compensation. 

It’s an investment in your revenue engine to drive repeatable revenue growth. By leveraging the power of data and fostering a motivated salesforce, QuotaPath equips you to achieve your most ambitious revenue goals in alignment.

To learn more, schedule time with our team. 

I’ll be the first to admit that we weren’t the perfect commission-tracking tool when we launched QuotaPath in 2018. However, it was never about “perfection” but rather about aligning with the “perfect” customer. Today’s launch does just that.

We started QuotaPath to simplify commissions and address broken compensation processes that compromised paying reps correctly. But simplifying a process that should be as dynamic as their teams wasn’t enough—something we identified from thousands of customer conversations over the years. 

Instead, we needed to improve QuotaPath to adapt to scaling organizations and offer the most flexible, intuitive platform that evolves alongside our customers.

This marks a pivotal moment for QuotaPath and our customers.

We’re thrilled to announce broad enhancements that make our platform the most adaptive in the market, empowering you to embrace change and growth confidently.

Now, Sales Managers have full visibility into their own attainment, even as reps move between teams. Our Dynamic Team Assignments make that a reality, updating quotas automatically to eliminate tedious manual adjustments.

Plus, compensation workflows flex to fit your precise needs. 

With Multi-Level Approvals, you can customize workflows for reps, managers, execs, and finance, ensuring the right eyes are on each deal at the right time. 

These are just a few of the ways we’re ushering in a new era of adaptability.

We’ve also expanded our integrations to include Xero and Microsoft Dynamics and launched a new app on the Salesforce AppExchange that embeds earnings data directly where reps work. 

The result is a centralized, friction-free experience that keeps everyone aligned.

The impact is real, which we can attest to personally. 

Since rolling these out internally at the beginning of the year, our own sales team has seen:

• 20% improvement in quota attainment
• 10 hours per month saved on comp plan administration
• 25% increase in the team’s eNPS

At its core, QuotaPath empowers you to build comp plans that are as dynamic as your business—plans that motivate reps with transparency, keep pace with growth, and scale with you. We’re committed to being your partner on that journey today and in the future.

Come see for yourself…

More than 60 percent of SEC enforcement actions against companies for financial statement fraud relate to improper revenue recognition.

Some of these violations were the result of unethical practices. However, many are due to sales compensation compliance challenges including the:

• Complexity of regulations
• Misclassifications and Worker Status
• Data Management and Record-Keeping
• Communication and Transparency
• Audits and Investigations

The potential risks of non-compliance are quite serious, resulting in hefty fines, penalties, and reputational damage.

Avoid these risks by knowing how to navigate sales compensation compliance with best practices for clear structures, record-keeping, and audit prep. The benefits of implementing these strategies include avoiding costly mistakes, fostering trust with employees and auditors, and ensuring a smooth and efficient sales program.

In this blog, we discuss: 

• Regulatory Requirements: Understanding the legal landscape governing sales compensation.
• Legal Considerations: Addressing potential legal pitfalls associated with commission plans.
• Risk Mitigation Strategies: Implementing best practices to minimize the risk of non-compliance.
• Resources: Providing valuable tools and references to help you navigate sales compensation compliance effectively.

Sales Compensation Compliance Challenges

Knowledge is power.

Understanding the challenges of sales compensation compliance will help you overcome these obstacles and boost your success. Read on to grasp potential difficulties before they arise.

• Complexity of Regulations: Sales compensation plans are subject to various regulations depending on your location. These regulations can be intricate and change over time. Keeping up to date on relevant laws and ensuring your plan adheres to them can be a significant challenge.
• Different regulations might apply to different types of sales compensation, such as commissions, bonuses, and profit sharing, or different types of employees, for instance, salaried versus hourly. Navigating these nuances can be complex.
• Misclassifications and Worker Status: Improperly classifying employees, such as misclassifying a salesperson as exempt from overtime, can lead to legal trouble. Determining the appropriate classification based on job duties and compensation structure also requires careful attention.
• Data Management and Record-Keeping: Maintaining accurate and detailed records of all sales activity, commission calculations, and payouts is crucial for demonstrating compliance during audits. This can be a time-consuming and tedious task, especially for companies with large sales teams or complex compensation plans.
• Communication and Transparency: Ensuring clear communication with employees about their compensation plan and its calculation can help prevent misunderstandings and potential legal disputes. Employees need to understand their eligibility for commissions, bonus structures, and how deductions and taxes impact their pay. Using a compensation communication plan is one way to avoid these issues and enhance employee understanding.
• Audits and Investigations: The possibility of audits by government agencies can be stressful. Having a well-organized and compliant system in place allows for a smooth audit process and minimizes the risk of penalties.
• Integration with Existing Systems: Ensuring seamless integration between your sales compensation software and other HR or payroll systems can be a challenge, potentially leading to data inconsistencies and errors.
• Internal Controls: Implementing strong internal controls to safeguard against errors and ensure data accuracy throughout the commission calculation and payout process can be complex. Controls might include establishing data validation procedures, keeping a clear audit trail for all calculations, and mandating supervisor approvals for commission payouts.
• Globalization: For companies operating in multiple countries, managing compliance with the varying regulations in each location can be a significant obstacle.

Download your copy of a customizable commission policy template.

Regulatory Requirements

Understanding relevant regulations for compliant sales compensation plans is crucial. Otherwise, you risk consequences of non-compliance such as fines, penalties, and legal issues.

Key Regulatory Bodies

Although regulations vary based on location, the main regulatory bodies that govern sales compensation in the United States include: 

• The Fair Labor Standards Act (FLSA): The FLSA defines minimum wage, overtime pay, and employee exemptions such as commission-based salespersons under certain criteria may be exempt from overtime. The Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) administers and enforces the FLSA.
• The Equal Pay Act (EPA): The EPA is focused on ensuring equal pay for equal work regardless of gender or sex. For instance, The EPA prohibits paying female salespeople a lower commission rate than their male counterparts performing the same job duties. The EPA is part of the FLSA and is administered and enforced by the U.S. Equal Employment Opportunity Commission (EEOC)
• The Internal Revenue Service (IRS): The IRS dictates how commissions are categorized for tax purposes, impacting withholding requirements and employee tax burdens.

Additional Regulations to Consider

Regulations vary not only by country but also depend on the state, industry, or specific circumstances. For example, state wage and hour laws and industry-specific regulations exist. To ensure compliance, it’s best to consult with legal counsel or HR professionals for guidance on regulations specific to your location and industry.

Staying Up to Date

Staying informed about changes in regulations is essential to sales compensation compliance. Some resources for helping you stay up to date with regulatory changes include government websites such as the DOL website and the website for your specific state labor law agency as well as reputable legal publications.

Legal Considerations

Beyond adhering to official regulations, there’s an additional layer of legal considerations. Failure to consider these can lead to potential legal disputes arising from unclear or poorly designed commission plans.

Key Legal Considerations

Independent Contractor vs. Employee Misclassification

It’s crucial that businesses correctly classify individuals providing services to the company as independent contractors or employees. An employee, also known as a W-2 worker, is a person who works for and under the direction of the company. By contrast, an independent contractor, also known as a 1099 worker, can perform their work at their discretion in terms of means and methods.

Proper classification carries implications for compensation structure. Businesses must withhold and deposit income, social security, and Medicare taxes from the wages paid to employees. Businesses must also pay the matching employer amount of social security and Medicare taxes along with unemployment taxes. Typically, tax withholding or payment is not required on payments to independent contractors.

The potential consequences of misclassification include unpaid overtime and tax liabilities. For instance, improperly classifying a salesperson as an independent contractor can result in the company being liable for back pay of overtime wages and payroll taxes.

Employment Contracts and Commission Agreements

Having clear and well-drafted employment contracts or written commission agreements that outline the terms of compensation is essential, preventing confusion and potential future issues.

Eligibility criteria, commission rates, calculation methods, payout schedules, and termination clauses are key elements to include.

QuotaPath is a tool where you can distribute, track, and collect signatures of sales compensation policies while giving employees access to their comp plans. This increases transparency while helping employees better understand how they earn commissions and streamlines compensation communication and adoption.

Non-Compete Agreements and Clawback Provisions

Non-compete agreements were historically quite common, designating a period after termination of employment where the employee could not work for a direct competitor. The enforceability of non-competes varied by region.

However, the Federal Trade Commission (FTC) recently banned the implementation of new non-compete agreements in the United States, which is set to go into effect in September 2024.

Assuming their legality in your region, non-compete agreements may limit geographic scope and duration depending on your location. Consult legal counsel to ensure enforceability.

Clawback provisions are clauses that allow the company to recoup commissions in certain situations such as customer returns or product cancellations.

Seeking Legal Advice

Proactively seeking legal counsel from an attorney experienced in employment law can help reduce the odds of legal disputes or litigation. Consulting a lawyer is highly recommended in situations like developing a new compensation plan or facing potential legal disputes.

Risk Mitigation

Proactive risk mitigation is key to minimizing the chances of non-compliance issues. Effective risk mitigation delivers many potential benefits such as avoiding costly fines and penalties, fostering employee trust, and streamlining internal processes.

Key Risk Mitigation Strategies

Develop Clear and Transparent Commission Plans

Commission plans must be clearly defined and well-documented to ensure employees understand them. This increases plan effectiveness, which drives company objectives and increases plan adoption.

Key elements to consider for clarity include eligibility criteria, commission rates, calculation methods, and payout schedules. Covering all these details reduces the odds of misunderstandings or disagreements.

Implement Strong Internal Controls

Establishing internal controls safeguards against errors and ensures data accuracy throughout the sales compensation process. For instance, this could mean implementing data validation procedures, mandating supervisor approvals for commission payouts, and keeping a clear audit trail for calculations.

Automate Calculations and Data Management

Leveraging sales compensation software to automate calculations, data entry, and record-keeping reduces the risks of human error and ensures commission tracking consistency. Sales compensation software like QuotaPath automatically pulls sales activity data from your CRM, increases accuracy, and streamlines processes.

“ASC 606 involves recognizing both revenue and expenses over the proper period of a SaaS or enterprise contract. Software like QuotaPath automates those calculations to keep you compliant,” Amy Walker shared.

How to Scale Finance Operations

In your first year as a startup, your finance operations can survive with a good, solid bookkeeper and cash-based accounting. However, the minute you start raising money, you should follow these steps.

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Regular Reviews and Audits

Conducting regular internal reviews of your sales compensation practices is essential for compliance. These internal audits allow for the early identification of potential issues while ensuring continued adherence to regulations and internal controls.

Consider including external audits at regular intervals for an independent assessment of your practices.

Proper documentation is crucial for audit preparedness. During a due diligence audit, “they’re going to want to see you have a solid set of books, you have a closing process, you have SOPs in place for your accounting function, and that you’ve got the proper controls in place,” according to Amy, “That lets people have faith in you and what you say your business is doing.”

Employee Training and Communication

Educating your sales team about the company’s compensation plan and their rights and responsibilities is vital to the plan’s success. Sharing the reasoning behind the plan helps develop rep buy-in, enthusiasm, and understanding of how they earn commissions.

By contrast, failing to provide proper training and information increases your risk of confusing and frustrating employees, possibly causing them to quit.

Regular communication is also essential, as it keeps employees informed and fosters trust in the system.

Resources

Use the resources in the following table to support your sales compensation compliance success.

Simplify Sales Compensation Compliance

Navigating sales compensation compliance is challenging. Develop an understanding of the relevant regulations and legal considerations. Then implement proactive risk mitigation measures to ensure sales compensation compliance.

Schedule time with our team to learn how QuotaPath can simplify sales compensation compliance navigation for Finance and Accounting teams.

Without a clear understanding of your sales compensation costs, you’re flying blind. It’s impossible to optimize your sales strategy or forecast future profitability accurately.

According to Alexander Group, the cash portion of sales compensation represents 40% of total sales costs and 7.9% of sales revenue. (Use this benchmark to determine if you’re getting the most from your sales investment while achieving sales goals and retaining team members.)

A percentage higher or lower than the benchmark may indicate poor performance, like when the sales team is falling short of quota. It can also indicate that pay mix, variable incentives, and other compensation factors require adjustment.

The other 60% of total sales costs include elements such as hiring, onboarding, management, support, technology, and training.

In this post, we explore the hidden costs of your sales compensation plan and dive into a practical approach for calculating the true cost of commissions and bonuses.

Key Metrics for Calculating True Cost

Let’s start by reviewing the various types of direct and indirect costs to consider when calculating the true cost of sales compensation.

Direct Costs

Base Salary & Commissions: Factor base salaries, commission rates, and bonus structures into the calculation.

Benefits & Taxes: Don’t forget to account for employer-paid benefits and payroll taxes associated with sales compensation. We recommend consulting with a financial advisor or tax professional for company-specific guidance on the tax implications of your sales compensation plan. Consider consulting with a financial advisor or tax professional experienced in payroll and employee benefits.

You should also review your Employer’s Payroll Provider Resources. Many payroll providers offer resources and guidance on tax and benefit implications of various compensation structures. Check their website or contact their support team for more information.
Additional online resources include: 

• Internal Revenue Service (IRS): The IRS website offers a wealth of information on employer payroll taxes and employee benefits. You can search for specific topics related to sales compensation, commission structures, and fringe benefits.
• Department of Labor (DOL): The DOL website provides information on employee benefits regulations, including health insurance, retirement plans, and overtime pay. These can all be relevant factors depending on the type of sales compensation offered.

Indirect Costs

Recruiting & Onboarding: Consider the costs associated with recruiting, hiring, and onboarding new sales reps. New hire ramp time, the amount of time it takes new reps to start achieving full quota, averages 3.1 months according to research by The Bridge Group. This is a cost you need to consider when calculating the cost of sales compensation. New reps cost more in commissions if you’re offering new hire quota relief and produce proportionally less revenue during this time.

Management & Support: Factor in the cost of sales managers, support staff, and sales enablement resources.

Technology & Tools: Include the cost of CRM systems, sales automation tools, and other technology used by the sales team. CRM software pricing starts around $7 per user per month, with more sophisticated options costing anywhere from $15 to $150 per user per month.

Note: Check out the CRMs that QuotaPath integrates with.

Based on online pricing we found that HubSpot CRM’s Professional Customer Platform is $3,105/month and Salesforce CRM Professional runs $4,000/month for 50 users when billed annually.

Training & Development: Account for the cost of training programs and ongoing development opportunities for reps.

Considerations Beyond the Numbers

In addition to the above, pay attention to the following when assessing your true cost of sales compensation. All of these elements can influence your actual sales comp cost, so if yours looks high, don’t assume you’re paying too much. Investigate these other areas to determine which contributing factors are impacting your numbers. 

• Sales Cycle Length: The length of your sales cycle can significantly impact the true cost of sales compensation. Longer sales cycles often require higher upfront investments such as salaries before commissions are earned.
• Sales Team Performance: Overall sales team performance directly affects the true cost. Lower-than-expected sales volume will result in lower commission payouts but might not necessarily offset the fixed costs like salaries and benefits.
• Alignment with Business Goals: Ensure your compensation plan incentivizes the right behaviors. A plan focused solely on closing deals might neglect customer retention or upselling opportunities.

Optimizing Your Sales Compensation Plan

Using a tool like QuotaPath, you can optimize cost at the plan level by identifying inefficiencies, running attainment scenarios, and aligning plans with business objectives.

Use QuotaPath to:

Identify inefficiencies

Discover aspects of your compensation plan that are raising costs.

Surface total effective commission rates per deal to determine if you are paying too much commission per deal without maneuvering a spreadsheet. Then analyze your least and most profitable sales reps according to gross margin.

Run attainment scenarios

Using Plan Performance Modeling, you can run attainment scenarios in QuotaPath to see how much you would pay in compensation if your team hit 80% attainment vs. 150%. This reporting functionality simplifies the modeling process by forecasting plan costs and their impact on other essential business metrics without creating a formula-filled spreadsheet.

Align your plans to business targets

Start your comp plan by agreeing on your key business metrics for the year. Then, add incentive components that directly influence those numbers. For instance, to boost retention, encourage account executives with a SPIF for each multi-year deal closed and offer account managers incentives for early or multi-year renewals.

Your comp plan needs to motivate sales rep behaviors that drive business objective achievement. Regardless of if your North Star metric is increasing gross margin, reducing customer acquisition (CAC) costs, or promoting cash flow, there’s a comp plan lever you can pull.

Learn Your True Cost of Sales Compensation

Calculating and understanding the true cost of sales compensation is crucial to the health of your business. Failing to do so hampers your ability to optimize your sales strategy or effectively forecast profitability.

Factor in the direct and indirect costs. Then bear in mind how sales cycle length, team performance, and plan alignment with business goals affect your actual sales compensation cost.

Simplify optimizing your sales compensation plan by using a tool like QuotaPath. It facilitates steps like identifying inefficiencies, running scenarios, and aligning plan business targets without creating a formula-filled spreadsheet.

For further guidance, explore our additional resources or schedule time with a team member to see how QuotaPath facilitates optimizing the cost of sales compensation.

Who needs to improve their inbound lead response strategies? 

Timing is everything when it comes to qualifying inbound leads. The possibility of qualifying a prospect drops by a staggering 21X when the response time is 5 to 30 minutes.

However, the response time isn’t the only challenge here. Take, for instance, one sales leader who is struggling with not only the reps lagging in responding but also giving up after two attempts.

If this is you, we’re here to help.

Below, we’ll review strategies to drive inbound leads response time and conversions.

Let’s get started.

What is Lead Response Time?

Lead response time is a measure of the average time it takes for a sales rep to respond to a contact after the prospect takes an action such as downloading content, completing a form, or responding to a call.

This metric is crucial under today’s market conditions. For instance, right now buyers are intent on eliminating needless tech and focusing on core tech stacks. So, if a buyer is reaching out to learn more about your platform, they consider it a possibility as a member of the essential stack.

Therefore, sellers have to strike when the buyer recognizes they have a problem versus allowing time to settle and enabling the buyer to accept the status quo.

How to Drive Inbound Leads Response Times

Here are a few ways you can start improving your team’s inbound leads response times today.

Add an Intermediate Role

One solution is to add an Inbound Sales Rep (ISR) role to your business development team.

This intermediate role sits between sales and marketing to triage leads as they come in. With an ISR in place, leads are sorted as follows: Unqualified Inbound Leads, Big ‘Whale’ Inbound Leads that are hot, and Just Right Inbound (‘Goldilocks’) Leads that are smaller but qualified.

The ISR can ask the unqualified lead challenger questions and direct them to the free product tier if appropriate or add them to a nurturing sequence. Then they can engage ‘Goldilocks’ leads through to close and get big ‘Whale’ leads in front of an AE ASAP.

Plus, with a dedicated role to manage inbound leads, you can set touchpoint minimums in place to overcome reps who stop trying to get in touch after a couple of times.

The ISR role was created in the early 2000s when businesses, especially SaaS, started implementing inbound marketing strategies. It has risen in popularity over the years, to the point that our query for ISR jobs on Zippia revealed 118,186 openings with a 5% growth rate.

Recommended Reading: SDR Compensation Plans

Automated Cadences

Another option to support lead response times is adopting automation.

Automating scheduled lead engagements can boost the efficiency of sales and marketing lead cadences. This ensures consistent and timely outreach and follow-ups and lightens the load on your sales and marketing teams by reducing the number of tasks requiring human intervention.

For instance, this is what QuotaPath does via our RevOps engine. All marketing leads fall into a lead cadence, and as they engage with our brand more via content or events, they score higher before qualifying as an opportunity.

Once they become an opportunity, or if they come in as a demo booked or trial sign-up, a new automated cadence is triggered between the rep and the contact.

Building a cadence for the expected timing, plus the number and type of engagements, helps ensure your reps can satisfy your performance criteria.

Recommended Reading: How to Start a RevOps Team

Incentivize Faster Response times

Last, and our favorite, consider incentivizing for faster responses.

You could do this using SPIFs to motivate reps to improve their performance on this KPI.

For example, identify the reps with the best response times and longest times. Leverage this information to identify coaching opportunities, convey what the highest-performing reps are doing, and then offer SPIF incentives to drive performance improvements.

Do SPIFs work? Why and when to use SPIFs.

“I’m a big fan of SPIFs,” said Mallorie Maranda, VP of Sales, WorkRamp, who had just implemented a team-wide SPIF.

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Another way to use SPIFs to improve response times is by setting up automated reminders for team members to follow up at specific intervals to maintain engagement with leads. Reward reps with a SPIF when they act on these reminders, helping them build this essential habit.

After all, timing is everything when it comes to inbound lead response times.

According to Chili Piper, “On average, it takes B2B sales teams 42 hours to respond to a new lead and 38% of those leads never reply back. It typically takes 4.3 days of back-and-forth communication before the first meeting even happens. Meaning, you have more chances of getting ghosted by your new opportunities the longer you wait.”

Recommended Reading: How to Shorten Sales Cycles

Conclusion

Timing is crucial in terms of inbound lead response times. Failure to contact inbound leads quickly means wasted leads, missed opportunities, and potential revenue that you can’t afford to lose.

You can drive better inbound lead response times by adding an inbound sales rep role to manage inbound lead distribution and responses. Automated cadences can help boost the efficiency of lead engagement consistency and timing. Then you can leverage SPIF incentives to reinforce desired response times.

Schedule time with a team member to learn how QuotaPath can help you run sales and revenue operations more efficiently.